The KLCI is a capitalization weighted index that maps approximately the top 100 companies of the Malaysia Exchange or the Bursa Malaysia. It is generally regarded as the accepted parameter for the Malaysian economy as it maps the most liquid equity stocks in the market. :
The KLCI is a market value weighted index, that means the day-to-day price change in each issue is weighted by its market value (as of the start of the day) as a percent of the total market value for all components. Thus, the price change for each constituent stock affects the day's change in the index in proportion to the company's market value. The basic formula for any index is (be it capitalization weighted or any other stock index):
Where the aggregate market capitalization is calculated as: Σ(Price of stock* Number of shares)*market weighing factor.
Rules for inclusion in the KLCI as of November 6th 2008 are:
The current list of companies for the KLCI can be found on the Bursa Malaysia Website.